Wenshan Walnut

once upon a time, "medical us stock" and "liquor stock" were regarded as "white horse stock" by the capital market, and "medical us three swordsmen" huaxi biology (688363.SH), aimeike (300896.SZ) and haohai shengke (688366.SH) were called "money printing machines" relying on over 80% gross profit margin ". In the highlight moment, the myth of the hundreds of billions of dollars in market value of Huaxi Biology and Aimee was once envied by their peers. But now, the sharp decline in market value and weak performance growth seem to have become the concentrated anxiety of these "medical US stocks.

Take Aimeike as an example. Although it handed over a report card with a gross profit exceeding Maotai in 2023, the stock price has been falling. Since its listing in 2020, the market value of Aimee has reached as high as 180 billion yuan, but as of the close of trading on April 12, the total market value of Aimee is 62.714 billion yuan, and the market value has evaporated over 100 billion yuan in just a few years.

The other side of the Huaxi creature, life is not easy. First, revenue and profits fell last year, and then core executives left. Under the poor performance of the secondary market, Huaxi Bio repeatedly repurchased shares to boost market confidence. As of March 31, the total repurchase amount exceeded 0.2 billion yuan.

under the trend of "Yan value economy", compared with the double-digit medical and beauty penetration rate of Japan, South Korea, Europe and the United States, China's single-digit medical and beauty penetration rate is still low, which certainly has market potential in the long run. But in the short term, under the trend of conservative consumption, the development of "medical US stocks" often determines their future.

This article mainly through the analysis of the "medical beauty three swordsmen" financial results, combined with the past few years of market action, to answer three questions:

1. Why is the capital market performance of "medical US stocks" unsatisfactory in the past two years?

2. Why is the performance of the "three swordsmen of medical beauty" divided?

3. In the long run, what is the core moat of "medical US stocks"?

1. change: cost-effective consumption "face-to-face" medical and beauty bosses

The "Three Musketeers of Medical Beauty" collectively encountered the "cold face" of the capital market. There are two main reasons: one is the return of the track itself to rationality, and the other is the impact of cost-effective consumption.

first of all, judging from the track's own attributes, medical beauty has both the dual attributes of "consumption + medical treatment" and the soaring performance of core enterprises such as Aimei Ke and Huaxi Biology. According to the logic of "good track and good company", capital speculation has raised the valuation of "medical beauty stocks" and the stock price is inflated.

Since its listing, Aimee's P/E ratio has reached a maximum of 400 times. So far, the P/E ratio is 38 times, a drop of more than 90%. Huaxi Bio is a company with a P/E ratio of over 200 times, but now it is trading at 33 times. Haohai Shengke's historical P/E ratio is 130 times, and the current P/E ratio is 47 times.

only from the valuation point of view, from as high as 100, 200 times to now down to about 30-40 times, which means that the entire medical and aesthetic plate is returning to rationality.

As one investor said: "As an industry with a partial consumption attribute, it is obviously not a rational state to give a valuation of up to a hundred times." In the final analysis, the medical and beauty industry is in the consumption track, and what it eats is also the dividend of "consumption upgrade.

Secondly, from the perspective of macro fundamentals, it is cost-effective consumption that severely "slaps the face" of medical and beauty bosses.

Medical beauty as a typical high customer unit price, high-frequency high-end optional consumption, by the residents' purchasing power, consumption will be more affected. Judging from the portraits of the main consumers in the medical and beauty industry, according to the "Little Red Riding Book 2023 Medical and Beauty Industry Annual Report", the medical and beauty population is currently mainly women in high-tier cities and medium-high consumption, and this part represents China's new middle-class population. Deloitte's "China Medical and Beauty Industry 2023 Insight Report" shows that the main population of high-end medical and beauty consumption is 26-40 years old, accounting for nearly 80%. It is also the main force of "cost-effective consumption.

Nancy is 31 years old and has worked in a major Internet factory in a first-tier city for many years. Before 2022, she spent nearly 10,000 yuan a year on medical beauty projects, but since last year, she has reduced her spending on medical beauty projects because "money is not easy to make". "Medical beauty is a bottomless pit." She told "Finance Mowgli" that many of her female friends around her have cut back on their spending on medical beauty programs this year: "Most of us will not be impulsive to fill our cards in beauty salons. Some of us will replace some medical beauty programs with skin care products, streamline skin care, and some friends will collect wool from different institutions."

There are not a few people like Nancy who choose to downgrade their consumption on "medical beauty. Under the tide of Ping for, "medical beauty group purchase" and "medical beauty downgrade" have become hot topics on social media. Some medical and beauty consumers have begun to tighten their pockets, and the industry has also seen consumer differentiation-high-end medical and beauty products that are easily 10000 are naturally not short of old customers, but light medical and beauty products that sell for thousands of dollars, such as photovoltaics and injections. Represented projects inevitably start to "roll prices".

when new oxygen CEO Venus inferred the development trend of the medical and aesthetic industry in the future, he first mentioned that "with the continuous improvement of the quality of medical and aesthetic services, the price continues to decline" is the key trend in the future. the resumption of the "three swordsmen of medical and aesthetic" started with "hyaluronic acid" as a raw material, it is inevitable to go the same way under the fierce price competition in the industry: price reduction.

Take the example. "Finance Mowgli" once analyzed the product structure of Aimeike in the article "Aimeike: Empty Moutai Dream, No Moutai Life". Solution injection products represented by "Hi Body Series" and gel injection products represented by "White Angel" constitute Aimeike's basic revenue, accounting for about 99%, of which solution injection products account for 58%.

Source: Aimei's 2023 Annual Report

according to the calculation of the 2023 annual report, the average selling price of for solution injection products dominated by "hi-body series" dropped from 374 yuan in 2022 to 325 yuan in 2023, a decrease of about 13%.

Haohai Biotech "Ophthalmology + Medical Beauty" walks on two legs, of which medical beauty and wound care products represented by "Haiwei", "Jialan" and "Haimei" account for nearly 40% of the total revenue. According to its annual reports, the average selling price of its hyaluronic acid products fell from 265 yuan in 2021 to 252 yuan in 2023, a decrease of about 5%.

It should be noted that lowering prices is not a bad thing. A good price reduction will not only not affect profits, but will quickly increase market share and have better fundamental performance for medical and US stocks themselves, as can be seen from the price reduction actions of auto leaders such as BYD. For the industry, it can also accelerate the penetration rate of the medical and US industry.

But on the matter of price reduction, the "Three Musketeers of Medical Beauty" have gone to a different fate.

One category is "good price reduction", such as Aimei. "Finance Mowgli" found that although the average price of Aimei's products fell, it did not affect the performance of gross profit margin. Gross profit margin rose instead of falling, and production and sales performed well. In 2023, Aimee's gross profit margin reached 95.09, an increase of 0.24 percentage points year-on-year.

in terms of production and sales performance, the sales volume of Aimee solution injection products increased by nearly 50% year-on-year to 5.1413 million, while the inventory also decreased by 43%, which to some extent also shows that the market demand is recovering and the company has also increased its efforts to remove inventory.

One category is "moderate price reduction". For example, Haohai Biotech has achieved "small profits but quick turnover" through price reduction. Although the gross profit margin of its medical beauty and wound care products business has dropped from 88% in 2020 to 77% in 2023, the revenue of this business segment has quadrupled in three years, becoming the "second engine" of the enterprise ".

One category is "relatively poor price reduction". Typical is Huaxi Bio, where revenue and profit levels have declined significantly.

To some extent, the gross profit rate reflects the pricing power of the enterprise. To put it simply, it is the right to speak in the industrial chain. Why do the "Three Musketeers", who are the same upstream "water sellers", have such different fates? In essence, it is caused by the different layout of the enterprise.

2, differentiation: platform vs capitalization vs vertical

In response to the same economic cycle and industry competition, the differentiation of the fate of the "three swordsmen" depends on the differences in the layout of the enterprise.

the difference between the "three swordsmen of medical beauty" is: huaxi biology is a platform-based enterprise with "raw materials" as its core advantage and multi-wheel drive. Aimeike is more like a product-driven company focusing on vertical segmentation. Haohai Shengke is a capital-driven enterprise.

Different genes and different layouts bring different advantages and disadvantages.

Huaxi Bio: a multi-wheel-driven platform enterprise

Huaxi Bio positions itself as a "four-wheel drive" platform enterprise, emphasizing that it revolves around "hyaluronic acid" from raw materials.The layout of the whole industry chain of R & D, production and sales enterprises. "Finance Mowgli" in the "king of hyaluronic acid" Huaxi biological step not open legs "has pointed out that Huaxi biological the most critical advantage is" raw materials ".

under this, two businesses, B- side (raw material products and medical terminal products) and c-side (functional skin care products and functional foods and others), have been formed around "selling raw materials". from the perspective of business proportion and enterprise strategic direction, c-side business dominated by functional skin care products is the locomotive driving revenue growth, accounting for more than 60% in the first half of 2022.

objectively speaking, Huaxi biology has certain advantages in the transition from 2B to 2C.

First of all, the advantage of the whole industry chain is essentially to reduce the intermediate links, which can ensure the stable and high-quality supply of production capacity and products. Therefore, we can also see that Huaxi Bio's brands such as Runbaiyan, Quadi, Mibel and BM Muscle Live are still competitive in the market. Secondly, different from the complicated channels of B- side medical and beauty institutions, the C- side "burning money for growth" traffic method can really make Huaxi Biology see more direct growth, and at the same time build its brand power in the efficacy skin care industry.

Another thing that cannot be ignored is that in the past two years, the medical and American industry has been in a period of "rectification pains. At the media communication meeting of the 2022 annual report, Zhao Yan, chairman and general manager of huaxi biology, made it clear that he "stepped on the brakes" on the B- side business: "when everyone said huaxi biology was a medical and beauty enterprise, I was very big. we were not a medical and beauty company, but only had medical and beauty products."

But eager to get rid of the "medical beauty label", the impact of "burning money for growth" on the C side is also real. First of all, Huaxi Biology underestimated the fierce competition in the track of functional skin care products, and the continuously rising flow cost made it impossible for the business to achieve more sustainable hematopoiesis. The gross profit margin of the sector fell from 82% in 2020 to 74% in the first half of 2023. At the same time, the sales of the above four core functional skin care brands also declined to varying degrees.

source: huaxi biology 2023 semi-annual report

With the slowdown in the growth of the main business, it is naturally difficult to transfuse blood for newly hatched growth businesses such as functional foods. In the field of functional foods, Huaxi Bio hatched black zero, no corner, water muscle spring, WPLUS brand. But the "financial mowgli" search social media found that the current small red book black zero official account products are off the shelf, Taobao also no black zero official flagship store figure. According to "Tech Planet", a Huaxi biological dealer said that black zero has stopped production because of poor efficiency.

In addition, internal management changes have exacerbated the turmoil in Huaxi Bio. On April 2, Huaxi Biology announced that Mr. Ma Shouwei, a core technician, resigned from the company for personal reasons. During his tenure, Ma Shouwei has created a number of explosive products such as Run Baiyan HACE sub-throwing essence, Mibel 3A purple essence and so on. In March, the manager of Huaxi Biology's brand Quadi also announced his resignation. At present, Quadi's internal dealer strategy has also been adjusted.

source: huaxi biological enterprise announcement

A marketing person in the beauty industry believes that the departure of the branch has a great impact on Quadi. "The strong binding between Quadi and the personal IP of the branch is essentially to make money for iron powder. Many people know Quadi through the branch." However, she also said that it is not uncommon to create a manager IP in the beauty circle, "to see if Quadi can continue to create the next IP and increase his influence among fans."

generally speaking, huaxi biology is still in a transitional period. whether it is channels, marketing or products, it needs a subversion.

Aimee: a product-driven enterprise with vertical deep cultivation of B end

In "Aimeike: Empty Moutai Dream, No Moutai Life", "Caijing Wuji" once summarized Aimeike as a typical product-driven company, and its advantage lies in doing two things right.

first, through the forward-looking cognition of the market, the product is quickly planned according to the user's pain points and indications, and the first-mover advantage of product compliance approval is obtained (the clinical trial period of class iii devices is relatively long, which generally takes 2-4 years, so once the product is approved, there is a time window). then, the market expansion and user mental precipitation are completed through the logic of large single products, the most typical case is the "hi-body 1.5" in which Aimei customers seize the neck pattern repair market ".

The second is to empower the medical and aesthetic institutions at the B end. Aimeike to "direct sales and distribution" model, Aimeike through its own full Xuan college and other resources to support, in the doctor group to promote products, reduce the cost of medical institutions. By the end of 2023, Aimee has covered about 7000 medical beauty institutions in China.

"Finance Mowgli" observed that the sales staff who complete the annual sales will be given the year-end bonus weight setting according to the importance of different products at the current stage. At the same time, the company also improves the channel sales ability through equity incentive.

However, driven by the above-mentioned core products, Aimee is not without "immediate worries and foresight".

First of all, "hi-body series" and other existing large single products into the stock competition, the follow-up "price war" in the price reduction or impact on the performance of enterprises. "financial mowgli" search "new oxygen" platform observed that in the hi body series of products, the main "basic water light" hi body 2.5ml price drop is the largest, the price of a single product is about 200-400 yuan.

Source: New Oxygen

Secondly, whether the potential big single product-the "white angel" series of recycled products can replicate the results of the "hi-body series" and continue to increase in volume. in July last year, auricular launched the expanded product "such as angel". according to the sales situation of auricular exchange of auricular angels in September, auricular angels are expected to contribute 20% to the company's overall performance.

Finally, look at the growth of the new vertical subdivision track. weight management, photoelectric medical beauty and recombinant protein are becoming the next promising market segment of Aimee, but different from the winning ticket on hyaluronic acid, the above-mentioned vertical track related products are currently in the research or clinical stage, and it will take some time before the real commercialization.

among the "three swordsmen of medical beauty", amike is undoubtedly the most stable enterprise. its advantages in products, brands and channels still exist, and short-term growth is visible. however, with the acceleration of entering the new track, amike will inevitably encounter the problems of hematopoiesis and blood transfusion under the "multi-wheel drive" as Huaxi biology once did.

Haohai Biotech: a capital-driven enterprise with a different approach

The layout of medical and beauty enterprises can be divided into three main paths: self-research, acquisition/equity participation and agency. Among them, large global medical and beauty companies, such as Aljian, are good at completing the layout of their business through capitalization means such as investment and acquisition. Capitalization means are very common in the medical and beauty industry, but Haohai Biotech is undoubtedly the most radical one.

In the field of ophthalmology, Haohai Biotech has achieved the layout of the whole industrial chain of the artificial lens business with "6 mergers and acquisitions in 5 years. In the field of medical beauty, Hao Haisheng indirectly controlled an Israeli professional radio frequency listed company through the acquisition of Ou Huameike, and invested in Eirion of the United States to obtain its Chinese interest in smear botulinum toxin.

The advantages of capitalization are significant. Haohai Biotech can quickly expand the medical beauty map, distinguish the long cycle of self-research, can quickly obtain the supply of raw materials, products, release the incremental effect. But the disadvantages are also visible, relying on mergers and acquisitions, affecting the self-research product capabilities of Haohai Biotech. the proportion of research and development expenses in total revenue fell to 8.29 percent from 8.55 percent in 2022, compared with 8.71 percent in 2023.

3, the future: stock competition, new raw materials competition

In the long-term trend of industry compliance and consumption slowly climbing, the medical beauty industry still has potential.

But where is the short-and long-term growth for the "Three Musketeers" and more medical stocks?

"Finance Mowgli" believes that we can focus on two aspects.

First of all, in the short term, 2 to 3 years, the market is still in the stock competition of old products due to product compliance.

under this time window, whether the "three swordsmen of medical beauty" can innovate through the old and bring forth the new around the products and people on the existing core items, and make up for the shortcomings in the main business, especially under the trend of "price reduction", it tests the internal management ability of the enterprise.

The trend we are concerned about is that both Aimei and Huaxi are making up for their shortcomings. for example, in terms of brand cognition, with the online trend of the medical and beauty industry and the rationality of consumers, Aimei needs to seek more direct links with consumers and enhance C- side consumption thinking. In November last year, Aimeike cut into the skin care track, essentially using the layout of skin care products to improve the operation capability of the C- side.

and Huaxi Bio's adjustment of the channels and marketing strategies of some brands such as Quadi also shows that the company is beginning to focus on profit performance, rather than sacrificing profits with growth in the past.

Secondly, for a long period of 5 to 10 years, it is necessary for enterprises to jump out of the Red Sea, seize the blue sea in raw materials and products, and look for the next big market of "hyaluronic acid" around the new vertical track.

For example, in terms of raw material ingredients, the new raw material ingredients represented by "recombinant collagen" have become the next point of competition for the "Three Musketeers of Medical Beauty. In 2022, Huaxi Bio acquired a 51% stake in Beijing Yierkang Bio and announced its entry into the reorganization of the collagen track, and the layout of the entire industry chain around the component. Coincidentally, Aimeike also through capitalization means, the acquisition of Harbin Peiqilong into the reorganization of collagen. In the research project of Haohai Biotech, there is also the project of "intelligent cross-linked collagen filler.

it is just different from the competition pattern of "hyaluronic acid" at that time. on the reorganization of collagen track, there are not only giant biology, jinbo biology and other enterprises that focus on this component, but also new forces such as chuangjian medical treatment and juyuan biology. for the "three swordsmen of medical beauty", it is undoubtedly a more difficult thing to relive the past glory.

Source: Zhongtai Securities

from historical experience, whether it is self-research, equity participation/acquisition, or agency, the logic of the strong is still applicable to the medical and beauty industry. as far as the "three swordsmen of medical and beauty" are concerned, they have gone through the last cycle from hype to rationality. low points and crises are not necessarily bad things. learning to practice internal skills and learn from each other's strong points before the next cycle comes, its value will be reassessed sooner or later.